Buying a house is a goal that might seem impossible to some, especially as house prices continue to rise year on year in Germany. However, there are still some places in the federal republic where people earning average incomes can realise their dreams of owning a home.

How much can an average earner in Germany afford to spend?

Buying a house or apartment in Germany continues to get more expensive every year, especially in the big cities. Considering the state of the housing market, getting a mortgage might seem like an impossible prospect for first-time buyers, especially those earning average incomes.

In 2020, a childless, single, full-time employee made an average of 3.975 euros gross every month. Once you factor in taxes and deductions, the employee would take home a net pay of 2.472 euros. According to experts, residents should only spend a maximum of 30 percent of their income on rent or mortgage loans, leaving the average German employee with around 742 euros to spend on housing costs.

This already highlights a big issue with the housing market in Germany. An average-sized house in Germany boasts around 140 square metres of living space. A house this size will cost around 376.000 euros, including extra expenses like tax and notary costs. Assuming you finance the load with 20 percent equity, and take out a decent loan with one percent interest and 2,5 percent repayment, your monthly payments would amount to 878 euros. Essentially, someone earning an average salary in Germany cannot afford to buy an average home.

Buying property and living within your means

So, where can someone earning an average salary live in Germany? Well, there are options, but they’re limited. According to data from the Postbank Residential Atlas, there are 149 cities or districts in Germany where average earners can afford to live in a home with 140 square metres of living space. These regions are mostly rural areas in Saxony and Saxony-Anhalt, but also include large areas of North Rhine-Westphalia, Rhineland-Palatinate, Lower Saxony, Hesse and Saarland.

The list also includes 15 big cities, mostly in the Ruhr area, like Duisburg and Mönchengladbach, but also in eastern Germany, like Magdeburg and even Bremerhaven in the north. There are also 14 medium-sized cities on the list (cities with up to 100.000 citizens) such as Frankfurt an der Oder, Weimar, and Eisenach.

High-income earners also have a limited choice

People who earn enough to make it into the top tax bracket also have a surprisingly limited choice when it comes to buying a home in Germany. In 2021, you would be in the top tax bracket when your taxable income is at 57.950 euros annually. This means someone at the top tax bracket limit would earn around 68.000 euros gross per annum. Once taxes and other costs have been deducted, that someone would be looking at a net income of around 3.300 euros a month. If they follow the 30 percent rule, they would be spending a maximum of 992 euros a month on their housing costs.

This is enough to find a 140 square metre home in 255 of the 401 cities and districts in Germany. While still limited in their scope, high earners can find houses in parts of Bavaria and Baden-Württemberg, as well as in the areas around Cologne, Düsseldorf, Hamburg, Berlin and Frankfurt. High-earners can also find homes in 16 more big cities, like Leipzig, Dortmund and Essen, and nine other medium-sized cities, including Flensburg and Worms.